Ethics and the Conduct of Business

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This comprehensive and balanced book gives a thorough treatment of the most prominent issues of business ethics and the major positions and arguments on these issues. An abundance of case studies help illustrate topics such as: whistle-blowing, discrimination and affirmative action, occupational health and safety, ethics in finance, and ethics in international business. For professionals in the field who want an up-to-date discussion of the most prominent issues of business ethics.

Preface

ix

Acknowledgments

xi

Ethics in the World of Business

1

(28)

Johnson & Johnson: The Tylenol Crisis

1

(2)

Introduction

3

(1)

Four Business Decisions

3

(9)

Business Decision Making

4

(8)

The Ethics of Hardball

12

(11)

Ethics, Economics, and Law

13

(5)

Ethics and Management

18

(4)

Morality, Ethics, and Ethical Theory

22

(1)

A Sticky Situation

23

(2)

Argus Incorporated: A Leasing Triangle

25

(4)

Utilitarianism

29

(20)

Lockheed in Japan

29

(15)

Introduction

30

(1)

Two Types of Ethical Theories

31

(3)

Classical Utilitarianism

34

(2)

The Forms of Utilitarianism

36

(3)

Cost-Benefit Analysis

39

(5)

Exporting Pollution

44

(1)

Beech-Nut's Bogus Apple Juice

45

(4)

Kantian Ethics, Rights, and Virtue

49

(22)

Big Brother at Procter & Gamble

49

(17)

Introduction

51

(1)

Kant's Ethical Theory

51

(6)

The Concept of a Right

57

(4)

Virtue Ethics

61

(5)

Clean Hands in a Dirty Business

66

(2)

An Auditor's Dilemma

68

(3)

Justice and the Market System

71

(30)

Green Giant Runs for the Border

71

(22)

Introduction

73

(1)

Aristotle's Analysis of Justice

74

(3)

Utility and Justice

77

(2)

The Egalitarian Theory of John Rawls

79

(5)

Utility and The Market System

84

(5)

The Libertarian Justification of the Market

89

(4)

Executive Compensation

93

(2)

Merck and AIDS in South Africa

95

(6)

Whistle-Blowing

101

(24)

Two Whistle-Blowers

101

(19)

Introduction

103

(1)

What is Whistle-Blowing?

104

(2)

The Justification of Whistle-Blowing

106

(5)

The Conditions for Justified Whistle-Blowing

111

(3)

Is There a Right to Blow the Whistle?

114

(4)

Developing a Company Whistle-Blowing Policy

118

(2)

A Whistle-Blower Accepts a ``Deal''

120

(1)

Better Late than Never?

121

(4)

Trade Secrets and Conflict of Interest

125

(30)

The Aggressive Ad Agency

125

(25)

Introduction

127

(1)

The Definition of a Trade Secret

127

(1)

The Arguments for Trade Secret Protection

128

(8)

Competitor Intelligence Gathering

136

(2)

Conflict of Interest

138

(9)

Managing Conflict of Interest

147

(3)

The Conflict of an Insurance Broker

150

(1)

Procter & Gamble Goes Dumpster Diving

151

(4)

Privacy

155

(32)

Psychological Testing at Dayton Hudson

155

(24)

Introduction

156

(1)

Challenges to Privacy

157

(4)

The Concept of Privacy

161

(3)

The Value of Privacy

164

(4)

The Privacy of Employee Records

168

(5)

Privacy on the Internet

173

(6)

Three Challenges to Employee Privacy

179

(1)

Ford Meter Box

180

(1)

Lotus MarketPlace: Households

181

(6)

Discrimination and Affirmative Action

187

(32)

Discrimination at Texaco

187

(26)

Introduction

189

(1)

What is Discrimination?

190

(6)

Ethical Arguments Against Discrimination

196

(2)

Avoiding Discrimination

198

(5)

Affirmative Action

203

(10)

Conclusion

213

(1)

The Alaskan Salmon Cannery

213

(2)

The Walkout at Wilton's

215

(4)

Women and Family Issues

219

(30)

Jacksonville Shipyards

219

(9)

Introduction

221

(1)

Sexual Harassment

222

(6)

Sexual Harassment or Business as Usual?

228

(11)

Comparable Worth

229

(10)

The Mommy Track

239

(6)

Family and Work

240

(5)

Is Family-Friendly Always Fair?

245

(4)

Unjust Dismissal

249

(24)

The Firing of Robert Greeley

249

(19)

Introduction

250

(1)

Property Rights and Employment at Will

251

(3)

Property Rights and Democracy

254

(3)

The Freedom of Contract Argument

257

(8)

Protecting Against Unjust Dismissal

265

(3)

Waiving the Right to Sue

268

(1)

A ``State-of-the-Art'' Termination

269

(4)

Marketing, Advertising, and Product Safety

273

(38)

Dow Corning's Breast Implants

273

(30)

Introduction

275

(1)

Ethical Issues in Marketing

275

(7)

Advertising

282

(11)

Product Liability

293

(10)

Volvo's ``Bear Foot'' Misstep

303

(1)

The Target Marketing of Cigarettes

304

(7)

Occupational Health and Safety

311

(28)

The Regulation of Benzene

311

(10)

Introduction

312

(1)

The Scope of the Problem

313

(2)

The Right to a Safe and Healthy Workplace

315

(6)

Whirlpool Corporation

321

(8)

The Right to Know About and Refuse Hazardous Work

322

(7)

Johnson Controls, Inc.

329

(10)

The Problem of Reproductive Hazards

330

(9)

Ethics in Finance

339

(30)

Pacific Lumber Company

339

(23)

Introduction

340

(1)

Financial Services

340

(5)

Financial Markets

345

(5)

Insider Trading

350

(4)

Hostile Takeovers

354

(8)

E. F. Hutton

362

(3)

Salomon Brothers

365

(4)

Ethics and Corporations

369

(42)

The Nun and the CEO

369

(23)

Introduction

371

(1)

Corporate Social Responsibility

372

(9)

Corporate Governance

381

(11)

Bath Iron Works

392

(10)

Corporate Ethics Programs

394

(8)

Sears Auto Centers

402

(2)

Campbell Soup Company

404

(7)

International Business Ethics

411

(35)

Nike in Southeast Asia

411

(28)

Introduction

412

(1)

What to do in Rome

413

(9)

Wages and Working Conditions

422

(5)

Foreign Bribery

427

(4)

Cultural Differences

431

(8)

H. B. Fuller in Honduras

439

(2)

Shell Oil in Nigeria

441

(5)

Index

446

The field of business ethics has grown in recent years into an interdisciplinary area of study that has found a secure niche in both the liberal arts and business education. Credit for this development belongs to many individuals--both philosophers and business scholars--who have succeeded in relating ethical theory to the various problems of ethics that arise in business. They have shown not only that business is a fruitful subject for philosophical exploration, but also that practicing managers in the world of business can benefit from the results. Ethics and the Conduct of Business,fourth edition, is a comprehensive and up-to-date discussion of the most prominent issues in the field of business ethics and the major positions and arguments on these issues. It is intended to be used as a text in a philosophical business ethics course or one taught in a school of business, on either the undergraduate or M.B.A. level. The substantial number of cases included provides ample opportunity for a case study approach or a combined lecture-discussion format. There has been no attempt to develop a distinctive ethical system or to argue for specific conclusions. The field of business ethics is marked by reasonable disagreement that should be reflected in any good textbook. The focus ofEthics and the Conduct of Businessis primarily on ethical issues that corporate decision makers face in developing policies about employees, customers, and the general public. The positions on these issues and the arguments for them are taken from a wide variety of sources, including economics and the law. The study of ethical issues in business is not confined to a single academic discipline or to the academic world. The issues selected for discussion are widely debated by legislators, judges, government regulators, business leaders, journalists, and, indeed, virtually everyone with an interest in business. An underlying assumption of this book is that ethical theory is essential for a full understanding of the positions and arguments offered on the main issues in business ethics. Fortunately, the amount of theory needed is relatively small, and much of the discussion of these issues can be understood apart from the theoretical foundation provided here. The book also contains a substantial amount of legal material, not only because the law addresses many ethical issues, but also because management decision making must take account of the relevant law. Many examples are used throughout the book in order to explain points and show the relevance of the discussion to real-life business practice. Preparing the fourth edition ofEthics and the Conduct of Businessprovides an opportunity to incorporate new developments and increase its value in the classroom. The most significant changes are the addition of a new chapter on ethics in finance and an overhaul of the chapter on international business ethics. Although finance involves many substantial ethical issues, the field of ethics in largely unformed. As a result the topic has been neglected in business ethics textbooks. The material in this chapter is adopted from my own workEthics in Finance(Blackwell Publishers, 1999), which is the first textbook in the field. Except for the section on insider trading, which has been retained from previous editions, the chapter on ethics in finance contains new material covering ethical issues in financial markets, financial services, and hostile takeovers, with cases on the takeover of Pacific Lumber, check-kiting at E.F. Hutton, and the bond trading scandal at Salomon Brothers. International business ethics is perhaps the fastest growing area in business ethics, and so a revised treatment is appropriate with a new edition. Because the problem of international "sweatshops" has received great attention in recent ears, this chapter begins with a case on Nike and includes a section on the topic of forei